WisdomTree, the sponsor of the exchange-traded fund, is launching a blockchain-native financial services application to enable mass adoption of digital assets.
Jason Guthrie, Head of Digital Assets Product and Head of Digital Assets for Europe at WisdomTree, told Markets Media: “Blockchain will have a fundamental impact and financial services will look very different in 10 years. It is natural for WisdomTree to make digital and DeFI assets more usable for ordinary consumers. »
DeFi, or decentralized finance, allows customers to recreate certain traditional financial services in a decentralized way on a blockchain.
Chief Executive Jonathan Steinberg said on WisdomTree’s January 2022 earnings call that the company will launch WisdomTree Prime, which adds a new direct-to-customer distribution channel for digital assets.
Steinberg added that over the past few years, WisdomTree has positioned itself for the next big structural shift toward a truly digital financial services experience.
He described WisdomTree Prime as a place where crypto interacts with traditional assets. Users will have the look and feel they are used to on traditional mobile apps while enjoying the benefits of a digital financial services experience based on the DeFi principles of choice, transparency and inclusiveness.
“WisdomTree Prime is designed for saving, spending and investing – both in native crypto assets or tokenized versions of traditional financial assets and blockchain-enabled funds – where we anticipate WisdomTree to be a product leader,” Steinberg added. “We play a much bigger role in the future of financial services and expect these digital asset initiatives to generate new revenue streams that can scale quickly and accelerate long-term sustainable growth.”
Guthrie argued that a big differentiator for WisdomTree is that it can offer transparency and consumer protection as a regulated institution. The company will help navigate the mass adoption of digital assets and intends to launch real-asset tokens that can be acquired in the wallet this year.
Will Peck, Head of Digital Assets at WisdomTree, said in a blog that the company defines digital assets broadly to include registered blockchain-enabled funds, which could include stocks and bonds based on WisdomTree indices, tokenized physical assets such as dollars, gold or other commodities and some crypto assets, for example, bitcoin and ethereum.
“WisdomTree Prime will be a curated experience – we do not aim to be an app for trading and speculation, but rather to provide a master suite of exposures and savings, payment and investment services,” added Peck. “For example, we’re building features like a debit card that can be tied to some of these assets.”
In addition, relying on the blockchain makes it possible to remove intermediaries and service delivery in a unified user experience.
Peck wrote, “While starting as a retail app, over time we look forward to serving institutions and financial advisory firms.”
WisdomTree Prime will have a beta launch in select US states in the second quarter of this year, followed by a nationwide rollout. The app will initially launch in the United States, but Guthrie said WisdomTree has international ambitions for the product.
Prime’s announcement follows other digital asset initiatives by WisdomeTree that were highlighted in the earnings call.
In November 2021, WisdomTree expanded its global digital assets team, including hiring John Davidson as global head of financial crimes. The following month, the company launched the RWM WisdomTree Crypto Index in the United States and a trio of exchange-traded products on the basket of crypto assets in Europe. The index includes bitcoin, ether, and 11 altcoins covering use cases ranging from DeFi to Metaverse.
In a blog Guthrie compared the growth of ETFs, which he described as “the financial innovation of the past two decades,” to the potential path of digital assets.
He wrote that ETFs were important in democratizing access to funds, which transformed the way the asset management industry responded to clients.
“The real power of ETFs was that once someone was set up to buy one ETF (all you needed was a brokerage account), you were set up to buy every other ETF that existed or was going to exist” , Guthrie added. “It created a dynamic that was historically absent from financial services: customer needs became the main driver of decision-making.”
Before ETFs, fund providers owned the distribution channels and controlled the flow of information, which limited investor choice and created pseudo-oligopolies according to Guthrie. Customers could only buy from one fund provider because the move was “EXTREMELY tedious”. However, ETFs have moved the distribution channel into a relatively open ecosystem, resulting in low fees, transparency, and increased innovation.
“That’s how a subset of financial services professionals understood the power of open systems,” he said. “The other lesson to be learned from ETFs is the power of standardization and the exposure-wrapping expertise that has been developed.”
Guthrie compared ETFs as a convenient wrapper for asset class exposure to tokenization as a convenient, more technologically advanced wrapper for asset class exposure. He went on to say that the digital asset ecosystem is in the very early days of its evolution.
“It is possible to build a financial system that is a step change from the one we have today because breaking down silos is really powerful,” he said. “About 20% of the world’s population is underserved by financial services, but digital assets are available to anyone connected to the internet and that’s very exciting.”